Jason Clare (Blaxland, Australian Labor Party, Shadow Minister for Resources and Northern Australia) Share this | Hansard source

Minerals exploration is important. We live in a world where it's easy to forget that so much of what we use, so much of what we depend upon, is made from things that are found and dug up. The best example that I can think of that is this the mobile phone, the smart phone, which almost everybody has and which is made up of more than 25 different metals, all of them mined here in Australia—everything from silicon, to make the screen, lithium and cobalt, in the battery, silver and gold, in the electronics of the phone, to aluminium, which is used to make the case. You can't have the benefits that these devices provide without the resources that are needed to make them. This phone is just one example of that.

The plates that we use to eat off every day have zircon in them. The glasses that you see here at the table are made from silica. The sunblock that we use when we go to the beach to protect us from the sun has zinc and ilmenite in it. This microphone projecting my voice has copper in it. Minerals are all around us, hiding in plain sight. They're not easy to spot here and they're not always easy to find beneath the earth's surface either. It's hard work. Exploring for minerals is a slow process, and without a proven resource it's always possible that you won't find something worth developing. It's expensive and it's hampered by unpredictable commodity prices. These factors add a lot of risk, and for that reason it can be difficult for junior minerals exploration companies to generate the capital that's needed to undertake the exploration of undeveloped regions.

Over the five years to 2015-16, expenditure on greenfield exploration around Australia dropped by 70 per cent. In 2014, to try to encourage more exploration, the government introduced the Exploration Development Incentive. This was a $100 million scheme which was supposed to incentivise greenfield minerals exploration. Unfortunately, the incentive was not fully used by industry, and the decline in greenfield minerals exploration investment has continued. The feedback from the minerals exploration industry is that one of the reasons that the incentive wasn't fully used is that it was too complex to access. The legislation that we're debating here tries to fix that. It makes a number of changes to the incentive. It implements a first-come-first-served approach and introduces caps on how much individual companies can access.

The trend of declining investment in greenfield exploration is a concern to the Labor Party. I'm sure it's a concern to all members here—at least it should be. That's why we're supporting this amendment to this legislation. We think it could help junior minerals exploration companies to attract capital and finance for greenfield exploration. Around 700 junior resource companies could be eligible under this scheme, and it has the potential to drive engagement and growth in greenfield exploration. The proposed incentive is only available to junior exploration companies with no assessable income in a tax year, and it excludes companies that have commenced resource production or that are connected to another company that has commenced resource production. We think that this draws a reasonable distinction between junior exploration companies and larger resource companies and that this incentive is targeted towards the companies that are serious about greenfield exploration.

The explanatory memorandum to the bill notes that it's the government's intention that the Department of Industry, Innovation and Science will review the operation of this scheme by 30 June 2020 to assess both its uptake and its efficacy in attracting investment. That's a good thing, but we think that this legislation could go one step further. We think there should be an annual impact assessment of the scheme and it should be a legislated requirement and publicly available. The member for Fenner foreshadowed that in his contribution a moment ago. It is our intention to move amendments in the Senate that would require an annual impact assessment to be conducted, the objective being to identify whether this legislation and these amendments result in additional exploration or prospecting. In addition to that, the Commissioner of Taxation would make publicly available the ABNs and names of entities receiving credits and the amount of credits given. We think this is important. If we're providing an incentive to business, it's important that we understand what the impact of that incentive is—whether it's worked or not, whether it's encouraged more exploration or not and whether it's delivered value for money to the Australian taxpayer. That's how we develop evidence based policy: assess it, pressure test it and make it public, and, if it doesn't work, change it. As I said, the shadow minister has foreshadowed our intention to move amendments to this effect in the Senate. I understand that the government is currently considering that, and I would encourage the government to support this amendment when it gets to the Senate.

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